• October 8, 2016

Q&A: Driving Transformation in the Automotive Manufacturing Industry

The pace of change in the automotive manufacturing industry is one of the swiftest and most pervasive across all business categories. Products, service, and even business processes are continually evolving, exposing greater customer expectations and concerns about protecting intellectual property (IP).

To better understand the drivers of change and get a peek into what the transformed future of the automotive manufacturing industry will look like, we turned to two Hewlett Packard Enterprise Chief Technologists for insight: Jim Miller, Energy, Manufacturing, Communications, Industrial, and Entertainment industries Chief Technologist, and Fellow; and Phil Mullis, United Kingdom and Ireland Manufacturing, Construction, and Services Sector Chief Technologist. Both Miller and Mullis work in HPE Enterprise Services.

Let’s discuss the big picture. What changes can we expect in the automotive manufacturing industry in the next three to five years?

Jim Miller: There are three areas of significant change. First, many new technologies are driving data-rich connections between manufacturers, consumers, drivers, vehicles, and the entire transportation infrastructure. They are dramatically changing the industry from a manufacturer perspective, and a consumer and governmental perspective.

Second is the speed of innovation. The pace of change at this point in time is significant: the introduction of new technologies in the environment, changes to a vehicle, and a vehicle’s connection to external entities. Auto manufacturers are struggling to keep up. You can see this in the new features in the automobiles themselves and the new services offered by manufacturers. When you look at the technology used by automotive manufacturers, the sphere of partners is increasing because a lot of the technology is electronic- or software-based. Automotive manufacturers have to deal with companies they haven’t traditionally dealt with to get the software and components into the vehicle.

Third, there is more focus on end-to-end services to consumers rather than just being a supplier of a product. One of the companies leading the way is Ford.

Phil Mullis: There will also be a more digitized product line. Products will start to be interconnected to other things, and product designs will include the Internet of Things. We will also see virtualized design—in other words, instead of producing models, a set of documents will be sent to be assembled. This is the idea of buy versus build. Think of Nike and Adidas, which are brands that generally don’t manufacture anything—they buy it all through outsourcing. We will see this trend in automotive. Also, we will see a move away from generic manufacturing and generic automotive products to more customized and personalized products, while still capturing savings.

What innovations will disrupt the industry?

Miller: V2V [vehicle-to-vehicle] communication—cars talking to each other while they drive down the road. There is a pilot program in Ann Arbor, Michigan, where 3,000 vehicles are using this technology for collision avoidance. For example, two vehicles approach an intersection, talk to each other, and can give audio/video cues so that their drivers can avoid a collision. This enhanced connectivity can be used for simple things in the car, such as entertainment and concierge services, as well as safety, security, and collision avoidance as this connectivity improves.

Mullis: The connected car has a different play in terms of product recalls. For example, Tesla had an issue with a charger plug but fixed the problem with an over-the-air software update rather than a traditional “return to dealer” recall. We’ll see more and more of this as additional technology gets into products.

What about longer-term innovations that are expected to impact the future state?

Mullis: Probably around 2020, you’ll see the autonomous car. Tesla will be there by about 2018. And then there’s the manufacturing opportunities that will come from 3-D printing. In possibly 10 years, we will have the ability to print various substrates—metal and plastic—together. As such, you could have a manufacturing facility that is a print shop, so you could get a car that is printed. Someone has actually printed one! In the future, you won’t have to go to the dealership to get a car, because it can be made locally to the same quality. Then the question focuses on the substrate. How do I make sure it’s not black market but the right quality and the right component? There will be tags on the actual substrates to make sure the quality is there, which is another security issue.

Miller: We can expect greater collaboration between the auto manufacturers and government agencies as well as other transportation agencies to connect vehicles to the transportation infrastructure. This is called V2I communication—vehicle to infrastructure. This is where a vehicle can communicate with various antennae placed on a stoplight or light post to optimize traffic patterns or assist with emergency services. V2I isn’t available to consumers yet, but all of the standards to enable it are in development with various agencies.

What about security? What issues will come to light as the industry transforms?

Mullis: As there is more digitizing in the product process, you have to worry more about protecting intellectual property. There are some things—the crown jewels—that can’t go out of the door. There will be a need for securing the IP through partitioning. The connected car and its associated ecosystem will also need protection.

Miller: Auto manufacturers need to look at protecting their enterprise from all different angles for a number of reasons. First, IP has to be protected because a leak can put them at a significant disadvantage with competitors. Second, the brand must be protected because a major breach can damage brand image and cause a reduction in sales. But the biggest challenge will be due to the expansion of the ecosystem. As more and more vehicles become connected and data is exchanged within the enterprise across manufacturers, government agencies, etc., the opportunities and challenges of security increase dramatically. And the opportunity for security threats becomes much more challenging. Manufacturers need to take an end-to-end approach to security.

What do industry leaders need to know to be prepared for the future?

Miller: Leaders need to be more open and flexible to the amount of change that is ahead and build teams that adapt to change quickly. They need to have a plan or a road map of how these changes can affect them from an internal process and in the products they produce. They can’t rely on old product planning techniques to be able to do this—the pace is increasing too quickly.

Learn more about moving the enterprise to the future state in “The Path to Self-Disruption: Nine Steps of a Digital Transformation Journey.”

Read more on coming changes to the manufacturing industry here.